9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 518 - CCI - GSTProfiteering - increasing the base prices of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate - GST rate reduction benefits not passed on - contravention of Section 171 of the CGST Act - penalty - HELD THAT - It has been established that the Respondent has profiteered by way of increasing the base prices of movie tickets by maintaining the same selling prices of the movie admission tickets despite the reduction in GST rate Services by way of admission to exhibition of cinematograph films where price of admission ticket was above one hundred rupees from 28% to 18% wet 01.01 2019. It Is also clear to us that the Respondent has not passed on the benefit of rate reduction for the period from 01 01.2019 to 30.04.2020 amounting to Rs. 88.67.790/- (inclusive of GST) to his customers/recipients Thus, the profiteering is determined as Rs. 88,67.790/-as per the provisions of Section 171 read with Rule 133 (1) of the CGST Rules 2017 and accordingly the Respondent is directed to commensurately reduce the prices of movie tickets in line with the provisions of Section 171 (1) read with Rule 133 (3) (a) of the CGST Rules, 2017. Further, since the customers/ recipients, in this case. are not Identifiable, we direct the Respondent to deposit the profiteered amount of Rs. 88,67,790/-along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is deposited, in two equal parts, in the Central Consumer Welfare Fund and the Telangana State Consumer Welfare Fund as per provisions of Section 171 (1) read with Rule 133 (3) (c) of the CGST Rules, 2017. The above amount shall be deposited by the Respondent within a period of 3 months from the date of receipt of this Order failing which the same shall be recovered by the Commissioner CGST/SGST as per the provisions of the relevant GST Act, 2017. Penalty - HELD THAT - The Respondent has denied the benefit of rate reduction from 28% to 18% w.e.f. 01.01.2019 to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act. 2017 and has committed an offence under Section 171 (3A) of the above Act. That Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act. 2017 vide Section 112 of the Finance Act, 2019, and the same became operational w.e.f. 01.01.2020. As the period of investigation was 01.01.2019 to 30.04.2020, therefore, he is liable for imposition of penalty under the provisions of the above Section for the amount profiteered from 01.01.2020 onwards.
Issues Involved:
1. Allegation of not passing GST rate reduction benefits. 2. Computation methodology for profiteering. 3. Scope of investigation beyond the initial application. 4. Legal interpretation of Section 171 of the CGST Act. 5. Procedural fairness and natural justice. 6. Impact of increased operational costs on profiteering assessment. 7. Requirement of judicial members in the authority's constitution. 8. Inclusion of GST in profiteering amount. Detailed Analysis: 1. Allegation of Not Passing GST Rate Reduction Benefits: The case began with an application alleging that the Respondent did not pass on the benefit of GST rate reduction on movie admission tickets from 28% to 18% effective from 01.01.2019. The DGAP’s investigation revealed that the Respondent increased the base price of tickets to maintain the same cum-tax price, thereby not passing the benefit to consumers, contravening Section 171 of the CGST Act, 2017. 2. Computation Methodology for Profiteering: The DGAP computed the profiteering amount based on the difference between the increased base price and the commensurate base price post-GST reduction. The total profiteering amount was determined to be Rs. 88,67,790/-. The Respondent argued that the computation should consider only movies running during the GST rate change period and that increased operational costs should be factored in. However, the Commission held that the benefit of GST rate reduction must be passed on to all consumers uniformly, irrespective of individual movie pricing or operational cost increases. 3. Scope of Investigation Beyond the Initial Application: The Respondent contended that the investigation should not extend beyond the initial application filed by Applicant No. 1. However, the Commission clarified that Section 171(2) of the CGST Act empowers it to examine all supplies made by a registered person to ensure the benefit of tax reduction is passed on to all recipients, not just the complainant. 4. Legal Interpretation of Section 171 of the CGST Act: The Respondent argued that the term "commensurate reduction" should consider all pricing factors and that the term "profiteering" was not defined in the Act. The Commission maintained that Section 171 clearly mandates passing on the benefit of tax reduction to consumers by reducing prices proportionately. The term "commensurate" implies that the benefit must be reflected in the price reduction corresponding to the tax rate reduction. 5. Procedural Fairness and Natural Justice: The Respondent claimed that the proceedings violated principles of natural justice as no show cause notice was issued before the investigation. The Commission found that the DGAP followed due process as per Rule 129(6) of the CGST Rules, 2017, and the Respondent was given ample opportunity to respond to the DGAP’s findings. 6. Impact of Increased Operational Costs on Profiteering Assessment: The Respondent highlighted increased rent and the prohibition on collecting parking fees as factors not considered in the profiteering calculation. The Commission held that these operational cost increases do not justify not passing on the GST rate reduction benefits, as the primary consideration is the base price of tickets. 7. Requirement of Judicial Members in the Authority's Constitution: The Respondent argued that the absence of judicial members in the NAA violates the Constitution. The Commission referenced various judgments to assert that quasi-judicial bodies like the NAA do not require judicial members and that its orders are subject to judicial review, ensuring adherence to natural justice principles. 8. Inclusion of GST in Profiteering Amount: The Respondent contested the inclusion of GST in the profiteering amount. The Commission clarified that the Respondent collected excess GST from consumers due to inflated base prices, which contravenes Section 171(1) of the CGST Act. Therefore, the GST component was rightly included in the profiteering amount. Conclusion: The Commission concluded that the Respondent profiteered by not passing on the GST rate reduction benefit, amounting to Rs. 88,67,790/-. The Respondent is directed to deposit this amount along with interest into the Central and Telangana State Consumer Welfare Funds. Additionally, the Respondent is liable for penalties for contravening Section 171(1) of the CGST Act. The Commissioners of CGST/SGST Telangana are tasked with ensuring compliance with this order.
|
